3c hapter - Index of

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C H A P T E R
Blue Skies, Pipe Dreams,
and the Lure of
Easy Money
Our Financial Legacy and Its Unintended Consequences
It wasn’t always this way. From the country’s earliest days, businesses
were built by marshalling a region’s surplus savings into local
ventures run by people known to the community. Often the funds
came from wealthy merchants and wholesalers, as well as farmers,
mechanics (the geniuses of the Industrial Age), and ordinary citizens.
Together, they helped create entire new industries, whether
mechanical clocks in Connecticut or machined- powered textiles in
Massachusetts, that built on the region’s strengths, expertise, and
social connections, much like Silicon Valley today. 1 Cities established
regional stock exchanges to facilitate the fl ow of capital to
area businesses. The problems, for the most part, came when people
began investing in more speculative ventures farther afi eld.
To explore the roots of our modern fi nancial failures, we must
travel back to the early 1900s, when my grandfather Ralph was just
making his way to America and our modern system of fi nancial
regulations was about to be created. In those days, the country’s
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